IME 301-W10 - HW2 LP Applications - Due: 01/19/10 IME...

Due: 01/19/10 IME 301-01 HW2 Lindsey Chun Linear Programming (LP) Applications For each of the problems below: a) Formulate the decision problem as a linear programming problem. b) Solve the problem using graphical solution procedure. c) Solve the problem using the Excel Solver. 1. Advertising Impact Problem The owner of the Sea Wharf Restaurant would like to determine the best way to allocate monthly advertising budget of $1000 between newspaper advertising and radio advertising. Management has decided that at least 25% of the budget must be spent on each type of media and that the amount of money spent on local newspaper advertising must be at least twice the amount spent on radio advertising. A marketing consultant has developed an index that measures audience exposure per dollar of advertising on a scale from 0 to 100, with higher values implying greater audience exposure. If the value of the index for local newspaper advertising is 50 and the value of the index for spot radio advertising is 80, how should management allocate the advertising budget to maximize the value of total audience exposure? a. X1 = amount spent on local newspaper advertising X2 = amount spent on radio advertising Max Z = 50x1 + 80x2 Subject to: X1, x2 >= 0 b. c. See “ “ spreadsheet Answers: x1 = 666.6667, x2 = 333.3333, max Z = 60,000 2. Investment Problem Investment Advisors, Inc., is a brokerage firm that manages stock portfolios for clients. A new

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